LITTLE ROCK, Ark. (AP) — Phone company Windstream Corp.'s second-quarter service revenues came in below Wall Street expectations, sending its stock down close to a two-year low.
The Little Rock, Ark., company's overall revenue and profit matched expectations, but analysts saw signs of weakness in the details.
Windstream's stock dropped 83 cents, or 8.2 percent, to $9.22 in afternoon trading. The stock hit a two-year low of $9 in June.
Windstream earned $54.2 million, or 9 cents per share, for the period ended June 30. That's down from $96.7 million, or 19 cents per share, a year earlier.
Taking out costs related to acquisitions and restructuring, earnings were 12 cents per share, matching the analyst average as surveyed by FactSet.
Revenue rose 49 percent from a year ago to $1.54 billion, chiefly because Windstream bought Paetec Holding Corp., which provides telecommunications services to business, in December for $883 million.
Wall Street analysts were also expecting revenue of $1.54 billion.
The Paetec acquisition is part of a strategy to bolster Windstream's traditional phone company business, which is focused on smaller towns and rural areas, with business services.
Revenue was down 1 percent compared to combined Windstream and Paetec results a year ago, and Citigroup analyst Michael Rollins noted that business service revenue, at $893 million, was weaker than expected.
The company also lost broadband subscribers for the first time. They were down 2,200 to 1.36 million. Bigger phone companies, which are focused on larger markets, have been losing DSL subscribers for some time to cable, a phenomenon that now appears to be spreading to Windstream's territory.
Windstream has 2.9 million phone lines, making it the seventh-largest provider of home phone service in the U.S.